The Dark Legacy of Biden's Crypto Policy: Regulation Through Hostility

The decline of bitcoin's price is being used by former Biden economic advisers as a justification for their administration's handling of cryptocurrency. However, their argument is based on selective memory and omission of key facts. The Biden administration's regulatory approach was characterized by hostility, rather than a reasoned framework, which had severe consequences for the industry. The authors of the op-ed credit the administration with aggressive regulatory efforts, but this claim is undermined by the fact that major frauds, such as FTX, thrived during this period. The administration's strategy of regulation-by-enforcement, rather than establishing clear rules, drove legitimate companies out of business and harmed consumers. The 'Operation Choke Point 2.0' episode, in which banks systematically debanked lawful crypto businesses, is a troubling example of the administration's approach. The authors dismiss crypto as having 'almost no practical use,' but this ignores its potential for fast and low-cost cross-border remittances, which can greatly benefit migrant workers and their families. The Biden economists' claim that no major tech firms are using blockchain technology is also incorrect, as many prominent companies are actively building on blockchain infrastructure. The op-ed's focus on short-term price movements is analytically unsound, and the labeling of the Bitcoin network as 'slow' overlooks its security benefits. The authors' invocation of a taxpayer-funded bailout of the crypto industry is a straw man, and their concern about moral hazard is selective. The Biden administration's handling of the Silicon Valley Bank collapse, in which it guaranteed all deposits, raises questions about its consistency on this issue. The op-ed's implication that the crypto industry's political donations are corrupt is unfair, as the industry is simply advocating for favorable regulation through democratic means. The Biden administration had the opportunity to establish the United States as a leader in digital asset regulation but instead chose to weaponize the banking system against a legal industry, resulting in a lose-lose-lose situation for innovation, consumer protection, and the U.S. crypto ecosystem.